Question

Where there are spillover (or external) benefits from having a particular product in a society, the government can make the quantity of the product approach the socially optimal level by doing the following except ________.(A) subsidizing the buyers of the product(B) taxing the sellers of the product(C) subsidizing the sellers of the product(D) providing the product itself

Answer 1

Answer:

(B) taxing the sellers of the product.

Explanation:

Spillover is the economic activity wherein one event is effected by unrelated event or context. As cost of production have some affect on the demand and supply schedule.

Similarly in the given case, if government subsidize the buyers of the product, subsidize the sellers of the product or providing the product itself will have spillover benefit from the product in a society, however, taxing the seller product will not have any benefit to the society as it increase the price of product.